World Bank accuses West of undermining Karzai

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The system used to channel Western aid to Afghanistan is undermining the government of Hamid Karzai and damaging development prospects, the World Bank has warned.

Donor countries including Britain and the United States are engaged in often wasteful projects outside the control, and sometimes the knowledge, of the Afghan administration, says a report by the Bank's economists.

Its main recommendation, that aid should be channelled through government agencies, is due to be discussed at next week's London conference on Afghanistan. The summit, jointly chaired by Tony Blair, the UN secretary general Kofi Annan and President Karzai, will draw up a five-year plan for speeding up reconstruction and attempt to combat the rising tide of violence. It will be attended by the representatives of 70 countries.

The Afghan government will present its own blueprint for the future, the national development strategy, which will also call for greater control over international aid. The top UN envoy in Afghanistan, Jean Arnault, said in Kabul yesterday that the plan was the result of "detailed consultations between the Afghan government and the international community".

He added: "It contains some key provisions on the Afghan leadership, capacity building for people and institutions, fairness and transparency aimed at making sure that international assistance to Afghanistan is not only maintained but further improved." Total aid, running at around $3bn (£1.7bn), is 10 times the government's revenue of $300m. But three -quarters of the money from donors is channelled outside the government budget. Alastair McKechnie, the World Bank country director for Afghanistan, said: "Experience demonstrates that channelling aid through government is more cost-effective. For example a basic package of health services contracted outside government channels can be 50 per cent more expensive than the package contracted by the government on a competitive basis.

"Furthermore, the credibility of the government is increased as it demonstrates its ability to oversee services and become accountable for results to its people and newly-elected parliament." Afghanistan is experiencing one of the bloodiest periods since "liberation" by US and British forces, with an increase in suicide bombings and attacks by a resurgent Taliban in the provinces bordering Pakistan. Britain is sending around 3,000 extra troops to one of the most violent provinces, Helmand, and the Dutch parliament is due to debate the deployment of a force of 1,200.

The report says donors want the government to establish its authority, but they are disempowering it through their aid strategy. Even the Afghan army and police are paid their salaries outside the control of Kabul.

Stephane Guimbert, a co-author of the report, said: "There was justification for giving direct aid just after the war when there was no infrastructure at all. But things have progressed since then." The report says Afghanistan has "accomplished remarkable progress" in some fields including education, building of roads and a stable currency. "Fiscal discipline has been strictly enforced and maintained, notably through control over the government wage bill. The government has also made a strong commitment to financial transparency and accountability."